Spanish Capital Outflow Picks Up, European Markets Cautious

Arthi Gupta
31 Aug, 2012
New York City

The European indexes were generally flat after inflation in the region rose to 2.6% and jobless rate inched up to a record high of 11.3%. Spanish current account deficit fell in June but net capital outflow from the banking system accelerated.

[R]2:00 PM Frankfurt – The European indexes were generally flat after inflation in the region rose to 2.6% and jobless rate inched up to a record high of 11.3%. Spanish current account deficit fell in June but net capital outflow from the banking system accelerated. [/R]

European indexes were generally quiet after inflation in the region climbed and jobless rate was flat. The net capital outflow from the Spanish banking system accelerated, according to the Bank of Spain.

Moody''s Investor Service said its review of Spain''s long-term debt rating to continue for a possible downgrade through the end of September.

In a separate report, Spain''s net bank outflows was €56.6 billion compared to a net inflow of €7.9 billion in June 2011, data from the Bank of Spain showed today.

The current account deficit fell to €257.2 million in June from €1.32 billion in the same month a year earlier.

The trade deficit in goods narrowed to €2.22 billion in June from €3.4 billion last year. The surplus in services rose to €4.37 billion in June from €3.98 billion the prior year.

In Paris trading, the CAC-40 Index gained 45.41 or 1.3% to 3,424.80 and in Frankfurt the DAX Index edged higher 89.46 or 1.3% to 6.984.26.

For the week, the CAC-40 Index fell 0.2% and the DAX Index surged 13.7%.

The yields on Spain’s benchmark 10-year rose seven basis points to 6.67%. Italian 10-year yields climbed two basis points to 5.78%.

Euro Zone Inflation Climbs, Jobless Rate Flat

Euro zone inflation climbed to 2.6% in August from 2.4% in July, flash estimate issued by Eurostat showed today.

The central bank has targeted inflation below but close to 2% over the medium term. The final report for August is due on September 14.

Separately, the seasonally adjusted jobless rate remained unchanged at a record 11.3% in July.

About 18 million people were unemployed in the euro area in July. Compared with June, the number of persons unemployed increased by 88,000.

The unemployment rate for EU27 nations was 10.4% in July.

Spain has the highest jobless rate of 25.1%.

Gainers & Losers

Essilor International SA fell 1.4% to €69.62 after the contact lenses maker reported first-half revenue climbed 22.8% to €2.53 billion from €2.06 billion on comparable sales growth of 6.6%. Profit attributable to equity holders of the company advanced 16.4% to €300.6 million or €1.45 per share from €258.2 million or €1.25 per share in the prior year.

Lagardere SCA soared 4.2% to €22.48 after the French media group reported first-half net sales totaled €3.4 billion, down 9% from €3.72 billion last year. On a comparable basis, sales edged down 0.2%. Net income in the period rose to €36 million compared to €28 million last year.

Vivendi SA dipped 0.7% to €15.50 after the French media and telecom group reported first-half revenue slid 1.2% to €14.084 billion compared to first half 2011. Earnings for the period plunged to €1.160 billion from €2.558 billion in the prior year.